Australian entrepreneur Dean McEvoy’s group-buying business Spreets mightn’t have made it into Pollenizer’s startup portfolio if not for the fact that McEvoy had some very aggressive targets and a prior working relationship with the incubator.
As a “low-volume, high-touch” incubator, Pollenizer passes up on many of the startups that come its way. It operates under a co-investment model that typically has Pollenizer stump up half of a business’ start-up costs for 25% equity, with either the founders or a third party footing the rest of the bill.
Pollenizer rarely funds business entirely, but in December 2009 agreed to bankroll Spreets for up to four months in exchange for a 50% stake.
McEvoy launched a product in February 2010, after 31 days of work. Pollenizer co-founder Mick Liubinskas said Spreets was profitable by day 31, bringing in $10,000 in revenue.
The project cost Pollenizer a total of $35,000, Liubinskas told Business Insider. Spreets was eventually bought by Yahoo!7 in January 2011 for a reported $40 million.
According to the SMH, Spreets had 500,000 members and more than 274,000 vouchers purchased when it was acquired. By then, Pollenizer owned a smaller share of the business as new investors had come on board.
“The only reason that [decision to invest in Spreets] worked is that we were able to get a result so quickly,” Liubinskas said. “We set ourselves a six-week target. Dean had 10 deals before we even started.”
Liubinskas noted that McEvoy was “very hungry” for success after failing to make it big with restaurant booking service Booking Angel, which he had been working on for six-and-a-half years.
Pollenizer was involved with Booking Angel for one of those years, sinking $100,000 into the business.
“There’s a lot of dark matter that goes with [building a business],” Liubinskas said. “A lot of people say we got very lucky with Spreets, but we worked very hard.”
Pollenizer was founded in 2008 by Liubinskas and CEO Phil Morle and has since taken on 26 startups, of which 17 remain operational.
Morle describes Pollenizer as a “co-founder” rather than an incubator, because of how much time and energy he and Liubinskas put into each startup from start to finish. Spreets is the only business that Pollenizer has “exited” so far.
Pollenizer previously allowed startups to apply to join its portfolio online. Liubinskas said it received 100 online applications a month; only one of those made it into its current portfolio of 26.
The online application form has since been removed. Pollenizer now gets 20 referrals a month from its network of contacts, which is still far more than Morle and Liubinskas can take on.
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